Norman Dong, the acting controller at OMB, said the goal of the rescission of A-
127 and the new Appendix D is to improve the quality, utility and the reliability
of federal financial information.

"If you look specifically at what we rolled out in Appendix D and compare it to
what we had in Circular A-127, you will see some sharp differences. A-127 was very
perspective on what agencies could buy, how they bought it and it actually
conflicted with other guidance within OMB on shared services," he said in an
exclusive interview with Federal News Radio. "This new guidance replaces a check-
the-box compliance approach where there were over 500 specific technical
requirements with more of an outcome-based approach focusing on financial
management, business and information needs."

The new guidance features only 70 requirements that OMB hopes will drive agencies
toward outcomes such as reporting timely financial data or eliminating waste,
fraud and abuse.

"The nature of the requirements is shifting. We are moving away from the highly
specific, narrow technical requirements that really aren't appropriate for
governmentwide guidance," he said. "We are focusing more broadly on financial
management objectives and outcomes."

Less prescriptive requirements

Dong said one good example of the change is A-127 required a GUI interface and
error message customization where it defined exactly what the pop-up should say.

"In terms of governmentwide policy and guidance, I don't think we want to get into
that level of detail and prescription, but instead focus on the broader outcomes
whether it's timely, accurate and reliable financial information or preventing
waste, fraud or abuse," he said. "Those are the things we should keep our eye on."

Dong said Appendix D now focuses on ways agencies can gauge how well they are in
meeting the requirements of the Federal Financial Management Improvement Act
(FFMIA), such as the number of and nature of material weaknesses and audit opinion
from the inspector general or third party analysis. Formerly A-127, and now
Appendix D, help agencies implement FFMIA.

Another major change with Appendix D is the focus on shared services. OMB has
strongly encouraged agencies to move to federal shared service providers for
financial management when appropriate, but some of the requirements under A-123
made it more difficult.

"Appendix D removes unnecessary financial system requirements that drive
complexity and cost, and it focuses on requirements that emphasize the
government's business and information needs," Dong said. "It comes back to the
whole principle of focusing less on the how, and focusing more on the what, and
focusing more on the objectives and outcomes we are trying to achieve in financial
management. If you look at the shared services model in the financial management
community, it very much is focused on what needs to be achieved as opposed to how
we do business."

Dong said one example of this change in approach to financial management happened
when a service provider and customer agency initially had discussions about
hosting the system and identified more than 700 gaps between how the customer and
provider were doing business. But, he said, when they shifted the conversation
away from how they were doing business and focused on what needs to be achieved,
the number of differences dropped dramatically.

Time has come for an update

OMB eventually will fold Appendix D into the rewrite of Circular A-123, governing
the internal controls of agency financial management.

Dong said the goal is to rationalize and harmonize OMB's guidance on federal
financial management. He said it's important to make sure the requirements are
reasonable and rationale.

"It's very similar to the work we are doing with grant circulars, where you have
eight circulars and have accumulated requirements over time," Dong said.